Monitor drops credit rating plan

Monitor has scrapped restrictions it planned to place on providers of essential NHS services.

They include debt caps, external credit ratings and curbs on dividend payments.

Under the 2012 Health Act, Monitor is obliged to set licence conditions for all providers of essential NHS services to protect patients if a provider becomes insolvent.

Monitor published a series of conditions earlier this year but in more details published this week on its final consultation on the NHS provider licence, some of those conditions have been dropped including no longer planning to directly restrict the level of debt providers can carry.

It has also dropped plans to require NHS providers to obtain and maintain “investment grade” ratings from credit rating agencies.

Monitor chairman and interim chief executive David Bennett said that the changes were made after feedback from some smaller and charitable providers indicated many would find the conditions difficult to meet.

He said the credit rating proposal had been intended as a way of establishing “whether or not a provider was exposed to excessive financial risk, and it had its attractions.”

But Monitor has since been convinced it was not going to be practical to use it and has looked at taking a different method of assessment.

Monitor is also shortly to publish its proposed guidance to commissioners on how to select commissioner requested services (CRSs) and Mr Bennett added that the essential question was: “Is this a service which a commissioner would struggle to have provided from another provider, with acceptable access, should the current provider get into difficulty?”